Decoding Capital Structure: The Role of Asset Composition, Growth Potential, and Profitability in IDXQ30 Firms (2021-2023)

DOI

10.2991/978-94-6463-862-2_15How to use a DOI?

Keywords

asset structure; growth opportunities; profitability; capital structure

Abstract

This study seeks to probe the influence of asset structure, growth opportunities, and profitability on the capital structure of firms listed in the IDXQ30 index from 2021 to 2023. Adopting a descriptive quantitative approach with multiple linear regression analysis (MLR) via SPSS version 27, the results unveil that asset structure exerts a significant influence on capital structure. Companies possessing a greater proportion of fixed assets tend to curtail their reliance on debt financing, in consonance with the Pecking Order Theory, which champions the preference for internal funding over external sources. Conversely, growth opportunities fail to exhibit a discernible impact on capital structure decisions, which are more substantially shaped by internal dynamics such as financial stability and risk appetite. Profitability, however, wields a pronounced effect on capital structure, with more profitable entities gravitating towards internal equity financing rather than external debt. These revelations provide invaluable strategic insights for financial decision-makers, facilitating the design of a more resilient and adaptable capital structure, while advancing the discourse on financial theory within the context of emerging markets, particularly in Indonesia.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Handi Handi
AU  - Ali Mursid
PY  - 2025
DA  - 2025/10/27
TI  - Decoding Capital Structure: The Role of Asset Composition, Growth Potential, and Profitability in IDXQ30 Firms (2021-2023)
BT  - Proceedings of the 2nd International Conference on Business, Accounting, Banking, and Economics (ICBABE 2025)
PB  - Atlantis Press
SP  - 191
EP  - 197
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-862-2_15
DO  - 10.2991/978-94-6463-862-2_15
ID  - Handi2025
ER  -